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| Apple shares plunge after downgrade shock – business live | Apple shares plunge after downgrade shock – business live |
| (35 minutes later) | |
| US stocks are continuing their downward spiral. | |
| The Dow Jones industrial average is now down by 2.4%, or 550 points. The S&P 500 is down by 2% and the Nasdaq down 2.1%. Apple is, unsurprisingly, a big weight in all of them. | |
| The US’s closely followed ISM manufacturing purchasing managers index (PMI) has also offered disappointing data, with the weakest new orders since January 2014. | |
| The index fell to a reading of 54.1 in December, much lower than the 57.9 consensus. The new order reading slumped from a reading of 62.1 in November to only 51.1. | |
| The survey pointed to continued expansion, but at a much less robust pace, according to Timothy Fiore, chair of the Institute for Supply Management’s survey committee. He said: | |
| Comments from the panel reflect continued expanding business strength, but at much lower levels. Demand softened, with the New Orders Index retreating to recent low levels. | |
| Trump pipes up. | |
| President Donald Trump has blamed the three-week-old US government shutdown on the Democrats, again, in a morning tweet. | |
| The Shutdown is only because of the 2020 Presidential Election. The Democrats know they can’t win based on all of the achievements of “Trump,” so they are going all out on the desperately needed Wall and Border Security - and Presidential Harassment. For them, strictly politics! | |
| And, as a chaser, he adds that the administration is “doing well in various Trade Negotiations currently going on”, mentioning China but not giving any detail. | |
| The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done! | |
| On a five-year view Apple has still made its investors a lot of money, but it has been an astonishing slump in just a quarter of a year from one of America’s corporate behemoths. | |
| Read it and weep. That vertical line on the right hand side is the performance of Apple at the Wall Street open. | Read it and weep. That vertical line on the right hand side is the performance of Apple at the Wall Street open. |
| Apple shares peaked at $233.47 in October, but they have since lost almost 40% of their value. They opened down 8.5% at around $144 and have kept going to more than 9%. | Apple shares peaked at $233.47 in October, but they have since lost almost 40% of their value. They opened down 8.5% at around $144 and have kept going to more than 9%. |
| If Apple shares remain on the same track today it would equate to the biggest one-day share price drop for five years, according to the Financial Times. | If Apple shares remain on the same track today it would equate to the biggest one-day share price drop for five years, according to the Financial Times. |
| The S&P 500 is down by about 1% as well, while the Nasdaq is down by about 1.4 in early trading. | The S&P 500 is down by about 1% as well, while the Nasdaq is down by about 1.4 in early trading. |
| While painful for investors, it’s worth bearing in mind that futures were pointing to worse losses on US indices earlier in the European trading day. | While painful for investors, it’s worth bearing in mind that futures were pointing to worse losses on US indices earlier in the European trading day. |
| The Dow Jones industrial average falls by 1% in early trading as ripples from the Apple revenue downgrade spread across the market. | The Dow Jones industrial average falls by 1% in early trading as ripples from the Apple revenue downgrade spread across the market. |
| A reminder before the Wall Street open: Apple’s market value was briefly above $1 trillion last year. Not any more. | A reminder before the Wall Street open: Apple’s market value was briefly above $1 trillion last year. Not any more. |
| The market cap was $749.39bn at the end of trading on Wednesday. A 9% fall, as predicted by pre-market trading, would see that fall to almost $680bn – or $67bn off. We shall see shortly. | The market cap was $749.39bn at the end of trading on Wednesday. A 9% fall, as predicted by pre-market trading, would see that fall to almost $680bn – or $67bn off. We shall see shortly. |
| More on that limp end to the year for the construction sector revealed by purchasing managers index data. | More on that limp end to the year for the construction sector revealed by purchasing managers index data. |
| The UK construction sector ended 2018 on a weaker footing, hitting a three-month low in December amid fading demand for commercial projects and the growing risk of a no-deal Brexit, writes Richard Partington. | The UK construction sector ended 2018 on a weaker footing, hitting a three-month low in December amid fading demand for commercial projects and the growing risk of a no-deal Brexit, writes Richard Partington. |
| Construction companies hit a weaker patch during the last month of 2018 as new orders increased at a relatively subdued pace, while there were some reports that wet weather disrupted work. | Construction companies hit a weaker patch during the last month of 2018 as new orders increased at a relatively subdued pace, while there were some reports that wet weather disrupted work. |
| Read more here: | Read more here: |
| UK construction sector ends 2018 on weak note amid Brexit worries | UK construction sector ends 2018 on weak note amid Brexit worries |
| Concerns over Chinese growth – spurred by weak manufacturing survey readings as well as Apple – have rightly dominated the business agenda so far this year, but here is a little reminder of what is ahead for the UK economy as Brexit approaches. | Concerns over Chinese growth – spurred by weak manufacturing survey readings as well as Apple – have rightly dominated the business agenda so far this year, but here is a little reminder of what is ahead for the UK economy as Brexit approaches. |
| The “startup” company hired by the government to operate extra ferries as part of no-deal Brexit planning had no ships, and now it turns out its website terms and conditions on its website were intended for a food delivery firm, writes Ben Quinn. | The “startup” company hired by the government to operate extra ferries as part of no-deal Brexit planning had no ships, and now it turns out its website terms and conditions on its website were intended for a food delivery firm, writes Ben Quinn. |
| “It is the responsibility of the customer to thoroughly check the supplied goods before agreeing to pay for any meal/order,” read part of the text on Seaborne Freight’s website – after it won a £13.8m contract. | “It is the responsibility of the customer to thoroughly check the supplied goods before agreeing to pay for any meal/order,” read part of the text on Seaborne Freight’s website – after it won a £13.8m contract. |
| Read more here: | Read more here: |
| Brexit freight ferry firm appears all geared up – to deliver pizzas | Brexit freight ferry firm appears all geared up – to deliver pizzas |
| More on the consensus-busting ADP number from Capital Economics. | More on the consensus-busting ADP number from Capital Economics. |
| Andrew Hunter, Capital Economics’ senior US economist, said the data provide “further evidence that, for all the recent volatility in financial markets, the US economy remains in a healthy shape going into 2019.” | Andrew Hunter, Capital Economics’ senior US economist, said the data provide “further evidence that, for all the recent volatility in financial markets, the US economy remains in a healthy shape going into 2019.” |
| The markets apparently now believe that the Fed won’t be raising rates at all this year. However, while we have long expected that an economic slowdown would eventually persuade officials to move to the side-lines later this year, we doubt that the Fed will be ready to abandon its rate hike plans when employment growth is still so strong and economic growth is still well above trend. | The markets apparently now believe that the Fed won’t be raising rates at all this year. However, while we have long expected that an economic slowdown would eventually persuade officials to move to the side-lines later this year, we doubt that the Fed will be ready to abandon its rate hike plans when employment growth is still so strong and economic growth is still well above trend. |
| Here is something (maybe) for the US investor bulls: | Here is something (maybe) for the US investor bulls: |
| Payrolls company ADP has reported that the US private sector added 271,000 jobs in December – far above the 178,000 expected, according to the economists’ consensus. The figures suggest that tomorrow’s market-moving non-farm payrolls data could beat current expectations of 177,000. | Payrolls company ADP has reported that the US private sector added 271,000 jobs in December – far above the 178,000 expected, according to the economists’ consensus. The figures suggest that tomorrow’s market-moving non-farm payrolls data could beat current expectations of 177,000. |
| The implications for stocks could be tricky: it could mean the economy is actually performing better than expected, helping company profits; on the other hand, it could persuade the Federal Reserve to tighten monetary policy faster, eventually slowing growth. | The implications for stocks could be tricky: it could mean the economy is actually performing better than expected, helping company profits; on the other hand, it could persuade the Federal Reserve to tighten monetary policy faster, eventually slowing growth. |
| Either way, the number is “a welcome jolt to the market’s favored narrative that the economy is slowing sharply”, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He added: | Either way, the number is “a welcome jolt to the market’s favored narrative that the economy is slowing sharply”, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He added: |
| To describe this as startling would be something of an understatement. The biggest increase in the ADP measure of private employment since February last year came out of the blue. | To describe this as startling would be something of an understatement. The biggest increase in the ADP measure of private employment since February last year came out of the blue. |
| US futures have recovered slightly as the New York markets prepare to open, but they still point to a tough day ahead for America’s biggest companies as investors try to judge how serious Apple’s surprise revenue downgrade really was. | US futures have recovered slightly as the New York markets prepare to open, but they still point to a tough day ahead for America’s biggest companies as investors try to judge how serious Apple’s surprise revenue downgrade really was. |
| The tech-heavy Nasdaq index appears in line to bear the brunt of investor fears, with futures down by 1.7%. Futures for the S&P 500 are down by 0.9% while futures for the Dow Jones industrial average are down by 1%. | The tech-heavy Nasdaq index appears in line to bear the brunt of investor fears, with futures down by 1.7%. Futures for the S&P 500 are down by 0.9% while futures for the Dow Jones industrial average are down by 1%. |
| Apple shares are set to fall by about 8% when the Nasdaq opens, after chief executive Tim Cook said the company had been blindsided by weaker demand for its products in China. | Apple shares are set to fall by about 8% when the Nasdaq opens, after chief executive Tim Cook said the company had been blindsided by weaker demand for its products in China. |
| It follows a trading day in Europe dominated by reaction to Apple’s announcement, which shocked Wall Street and sent down the share prices of Apple suppliers and companies with major exposures to the Chinese economy – the makers of luxury goods such as Gucci owner Kering and Burberry prominent among them. | It follows a trading day in Europe dominated by reaction to Apple’s announcement, which shocked Wall Street and sent down the share prices of Apple suppliers and companies with major exposures to the Chinese economy – the makers of luxury goods such as Gucci owner Kering and Burberry prominent among them. |
| Apple's shock profit warning sends European shares sliding | Apple's shock profit warning sends European shares sliding |
| In the UK, a quieter day for the City sees the FTSE 100 – now flirting with positive territory – led by Next. Despite a small profit downgrade, the retailer reported a better than expected Christmas period. | In the UK, a quieter day for the City sees the FTSE 100 – now flirting with positive territory – led by Next. Despite a small profit downgrade, the retailer reported a better than expected Christmas period. |
| UK construction figures earlier in the day also confirmed that the sector is in wait-and-see mode ahead of Brexit. | UK construction figures earlier in the day also confirmed that the sector is in wait-and-see mode ahead of Brexit. |
| Shares in AstraZeneca and GlaxoSmithKline have been buoyed by the $74bn Bristol-Myers Squibb deal with Celgene. | Shares in AstraZeneca and GlaxoSmithKline have been buoyed by the $74bn Bristol-Myers Squibb deal with Celgene. |
| Both were in negative territory earlier in the day, but AstraZeneca is now up by 1.6% and GSK has gained 0.9%. Look at the jump in AstraZeneca’s share price after the deal was announced at around midday GMT: | Both were in negative territory earlier in the day, but AstraZeneca is now up by 1.6% and GSK has gained 0.9%. Look at the jump in AstraZeneca’s share price after the deal was announced at around midday GMT: |
| Even with volatile stock markets and fears over global growth, it looks like Bristol-Myers Squibb has persuaded some investors that big pharma mergers and acquisitions are still possible. | Even with volatile stock markets and fears over global growth, it looks like Bristol-Myers Squibb has persuaded some investors that big pharma mergers and acquisitions are still possible. |
| The first mega deal of the year has just landed in the US: pharma company Bristol-Myers Squibb plans to buy biotech firm Celgene for a cool $74bn. | The first mega deal of the year has just landed in the US: pharma company Bristol-Myers Squibb plans to buy biotech firm Celgene for a cool $74bn. |
| The $102.43 per Celgene cash and stock share offer will give Bristol-Myers 69% of the new business. It is expected to close in the third quarter of the year, generating cost synergies of $2.5bn by 2022. | The $102.43 per Celgene cash and stock share offer will give Bristol-Myers 69% of the new business. It is expected to close in the third quarter of the year, generating cost synergies of $2.5bn by 2022. |
| Shares in Celgene, which specialises in treatments for cancer and other severe, immune, inflammatory conditions, have surged by about 30% in pre-market trading. Bristol-Myers shares fell by 13%. | Shares in Celgene, which specialises in treatments for cancer and other severe, immune, inflammatory conditions, have surged by about 30% in pre-market trading. Bristol-Myers shares fell by 13%. |
| Giovanni Caforio, chairman and chief executive of Bristol-Myers Squibb (who cannot have had much of a holiday), said he was “impressed by what Celgene has accomplished for patients”. | Giovanni Caforio, chairman and chief executive of Bristol-Myers Squibb (who cannot have had much of a holiday), said he was “impressed by what Celgene has accomplished for patients”. |